WHEN THE U.S. property market began to sink in 2007, few people foresaw what was about to transpire. The U.S. financial system, which had built up huge stocks of debt gambling on the residential property market, began to totter. A string of banks went into liquidation. In late 2008, the crisis came, paralyzing the North Atlantic financial system.

Governments around the world pitched in to prevent a total meltdown. Hundreds of billions, and soon trillions of dollars, were thrown at the banking system, and unlimited government guarantees were introduced. The financial system began to stabilize as the private debt was transferred into public hands.

The bank bailouts were followed by a program of printing money, or, as it is officially known, quantitative easing. Three rounds of this pulled U.S. official interest rates down to 0.25 percent. The European, British and Japanese central banks soon followed the lead of the Federal Reserve.

Then, starting in early 2009, governments of the Group of 20 member states poured hundreds of billions of dollars into stimulus packages--mostly subsidies to business--to stop the contagion that now was occurring as the advanced economies fell into recession.

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The trillions of dollars that were thrown at the big capitalists stabilized the system for a period. But for working class people, the costs were enormous.

Wealth Polarization

Governments shoveled handouts to the banks and big business, but unleashed savage cutbacks against the rest of their populations.

It has been attack after attack on wages, what remains of the welfare state and workers' rights for almost a decade in North America and Europe. Workers have been kicked out of their jobs and then re-employed on lower wages and temporary contracts. The right to strike, a decent minimum wage and union representation have been undermined. Millions of older workers have lost their jobs and never found another, subsisting now on precarious and poverty-line dole payments or age pensions.

Governments have skewed the tax system even further in favor of the wealthy. And many businesses and wealthy individuals simply avoid paying tax altogether with the help of lawyers and offshore tax havens "sucking the life out of the welfare states in the rich world," as Oxfam put it in a report published in January. The result is that the share of income accruing to profits has grown across the G20, while that going to wages has shrunk.

In order to prevent workers putting a stop to such regressive policies, the capitalists have done their best simply to abolish democracy. In the European Union, where straight-out blackmail has not sufficed, the unelected European Central Bank and European Commission have overturned elected governments, the better to impose austerity on member states. In the Asia-Pacific, the protocols of the Trans-Pacific Partnership agreement will likely have much the same effect.

Outside the advanced economies of the G20, the situation is, if anything, worse. Decades of "structural adjustment" programs have ripped away whatever welfare policies or subsidies on essential goods were in place. As a result of these trends, inequality has soared. As Oxfam reported, the poorest half of the world population received just 1 percent of the total increase in global wealth since 2000, while the top 1 percent grabbed half of the increase. Just 62 individuals now own wealth equal to that held by the bottom half of the global population, 3.6 billion people.

A Crisis That Never Ended

Despite the trillions, crisis and volatility are once again on the front pages of the newspapers. There are daily reports about the latest plunge in stock markets, the flood of capital leaving China and other "emerging economies" and collapsing commodity prices.

In truth, the crisis of 2008 has never truly been overcome. Despite all the money thrown at the capitalists, despite the record low interest rates, despite all the attacks on the working class, the capitalist system is still in a weak condition.

The money printing may have boosted stock markets around the world, but it has done nothing to seriously stimulate production of new goods and services in the advanced capitalist states.

In many European countries, GDP is barely higher than it was in 2008. Japan has experienced repeated recessions. In the U.S., the recovery from the crisis was the slowest since the Second World War, and in the last half of 2015, GDP was growing by 2 percent or less in the U.S. and Britain, the supposed "success stories" of the post-global financial crisis world.

There is no end in sight for the crisis in the advanced economies. The room for fiscal stimulus has dramatically narrowed, interest rates can't go any lower, and household, corporate and government debts are higher.

Australia may not have suffered like other economies. Indeed, the unprecedented 25-year expansion continues. But the economy is not immune: national income is falling as commodity prices decline, wages are flat, private debt is at record levels, and the property market is overvalued.

The outlook for the developing world is far from rosy. In China, after years of stimulus-driven growth, the economy is cooling; in Russia, Brazil and South Africa, the situation is direr. Brazil is in a serious depression. For some years, the financial pundits hoped that these countries would pull the world economy out of its funk. Now they are seen as a source of stagnation. But the sources of the crisis are far deeper than the sharp cycles of boom or bust in a few middle-income nations.

Taken as a whole, the world economy is stumbling. The IMF, OECD and World Bank are repeatedly downgrading their forecasts. Global unemployment is forecast to rise this year to 200 million, 30 million more than at the onset of the crisis in 2007.

The Function of Racism

The economic malaise is underpinning political polarization.

The capitalists and the governments that do their bidding are trying to deflect blame by whipping up racist hatred. New political forces are emerging that grow out of this climate.

There is widespread dissatisfaction with the status quo in Europe and North America. Two generations ago, workers filling out the birth certificate for their child could be confident that the infant would have a better life than they had. Today, this idea is more or less broken. Looking at the economic wreckage of the last decade, the only rational expectation is that things will get worse for their offspring. Someone or something must be to blame for this state of affairs.

The ruling classes in the West understand this sense of resentment well. That's why they have tried a series of toxic diversionary measures to take the blame off their shoulders.

Chief among these has been racism. Compared to a decade ago, the levels of establishment, media and institutional racism are far higher. In virtually every Western country, it has become open season on Muslims and refugees and, in some, the Roma people.

Wars and invasions in the Middle East have been an important factor underpinning the generation of racism towards Muslims--but the need to target an enemy within to take the population's minds off a domestic agenda of austerity is also an important factor.

And so, in whatever country you venture into, you can see the politicians spew hatred at refugees, at Muslims, at welfare recipients. They erect walls to keep out asylum seekers and militarize their immigration programs. They slander Muslims and "dole bludgers" in the pages of every newspaper.

This isn't just "ideology"; there's money to be made. The IMF is now urging EU member states to waive the minimum wage for asylum seekers to boost profits for the bosses and encourage divisions in the working class.

But the mainstream politicians do not have a monopoly on this racist offensive. New parties have sprung up peddling extreme racism, old ones have been resuscitated, and "mavericks" have appeared in traditional parties trying to sell their vile, divisive wares.

Across Europe, you can see fascist and hard right parties advancing in the polls--in Sweden, in Holland, in France, in Britain, in Denmark, in Hungary, in Greece, in Poland, in Finland and more. In the U.S. Republican party, Donald Trump has fanned the flames of racial hatred against Latinos and Muslims.

Trump in the U.S. and the far right parties in Europe claim to be "outsiders," not part of the political establishment that has unleashed misery on tens of millions. So they attract support from the disaffected, the ruined--those who have turned away in disgust from the traditional parties.

But whether establishment or "outsiders," the message from these political forces and individuals is the same: blame the vulnerable and take the focus off the capitalist system. This is why these same "mavericks" and "outsiders" promote the same old capitalist policies of cuts to company tax, reductions in the minimum wage and so forth.

Geopolitical Tensions

Another aspect of the instability generated by the economic situation is the rising tension between rival ruling classes of the world. Capitalism is a dynamic system in which some nations rise and some fall.

In the last decade, the U.S. and Europe have languished while China marched ahead. The U.S. fears the latter's growing power and is determined to prevent it from becoming a regional military power in the Asia-Pacific. And so, while the U.S. claims it doesn't have the money to build public transport or infrastructure capable of withstanding the regular winter blizzards and summer hurricanes that cost the lives of hundreds, it places contracts worth hundreds of billions of dollars with the arms manufacturers to supply new submarines and fighter jets.

Australia is deeply involved in the growing tensions between the U.S. and China, playing an important role as Obama's deputy sheriff. The region is witnessing the biggest arms race in the world as each country tools up in preparation for future conflicts over spheres of influence.

In the EU, the various member governments are ripping into each other.

Who is to bear the responsibility for resettling asylum seekers and who is to pay for bailing out the banks? Each tries to foist the burden onto another. Mainstream analysts ponder the potential for the EU to disintegrate under the impact of these divisions.

The Need for a Fightback

The right has made the running since the onset of the economic crisis. The left has not been capable of resisting it. Trade union membership has been in decline. The result has been widespread cynicism, if not despair.

But this does not mean that the capitalists can breathe easy or that workers are simply accepting everything that the capitalists throw at them. In some countries, China most obviously, workers have taken things into their own hands, and the strike rate is rising to record levels.

Elsewhere, alienation from the political establishment has caused support to flow to new parties or figures on the left promising some mitigation of workers' woes through the implementation of the traditional social democratic agenda--an end to privatization, improved minimum wages, better social welfare, more spending on public health and education, protection for age pensions--those things long abandoned by the traditional workers' parties.

Whether it's SYRIZA in Greece, the Left Bloc in Portugal or Podemos in Spain, such organizations have won a substantial following in the working class. In Britain, Labour Party leader Jeremy Corbyn, despite having no institutional support in his own party, is very popular with voters, and new members have joined Labour in droves. In the U.S., Sen. Bernie Sanders is polling far ahead of expectations in the Democratic presidential primaries.

These figures and individuals are certainly not the solution to the problems that workers face--SYRIZA's betrayal of its anti-austerity agenda within months of taking office demonstrates the limits of working within the machinery of the capitalist state. But support for these does indicate that many workers see the need for a left-wing alternative to the status quo.

The task for the left is to gather our forces and organize where we can to resist the capitalist offensive against workers, students and the poor.

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